The implementation of Making Tax digital (MTD), a step towards digitalisation of UK’s tax system was scheduled in just a few weeks from now, however BCC took a call to delay this. This action was taken in response to a recent survey conducted by BCC for small and medium firms to gauge their readiness for this compulsory project. The survey highlighted that 24% of firms had not even heard of MTD. To give firms a final chance to get themselves get prepared for the big change, the delay has been made
Although businesses and individual tax payers will be able to access their tax details online post introduction of MTD, or may choose to use a bookkeeping company in UK or leverage on accountant outsourcing services, adequate knowledge of the system and the related processes is a definite requirement.
Other than the unawareness related to MTD, Brexit is another reason behind BCC’s decision to delay the implementation of MTD.
A total of 51.9% have voted for full withdrawal from EU, there still hasn’t been a fix statement with a finalised date. The SME’s (Small and Medium-sized Enterprises) have been going through a tough time due to numerous costs with increased overheads due to addition of Brexit related costs. The UK stepping out of EU, will end up adding a tonne load of administrative burden as no one can have a certain prediction about what will Brexit bring to the nation.
MTD will definitely be a makeover for the UK’s tax system, however on the verge of departure from the EU, this very moment would not be the right time for the implementation it.
Mike Spicer, BCC has stated previously that, they were concerned about the fact that several firms still are not clear on what ‘Making Tax Digital’ is or what it means to their operations. BCC’s conducted survey includes around 1000 companies, a result of which shows that nearly 19% of the SME’s have no information about MTD or they have just heard about it,and almost two third of the businesses with nearly 66% have only the rudimentary information regarding their duties with MTD.
‘Even after being a such a good idea of uplifting the complete system with modern technologies, the current time is the worse for implementation’, is what was stated by Suren Thiru, Head of Economics, British Chambers of Commerce.
Lack of technical and Software related knowledge
The digitalisation of the complete tax system, which on ground level means making everything online, has a requirement of upgrading the individual SME’s systems to a MTD-friendly software.
However, currently there are multiple softwares out in the market and people are using any of them according to their personalised requirements. The bookkeeping companies in UK or accountant outsourcing services and vat returns outsourcing service providers may also need to update their tools to make it MTD friendly.
It’s been suggested by many experts that HRMC should concentrate on changing one thing at a time which would help them avoid confusion in recent future.
For now leveraging the delay called by BCC for Making Tax Digital, all SMEs should focus on planning their operations to meet MTD’s compliance needs, and educating themselves to be ready for the MTD implementation.